CAIRO: In what has become one of the most heavily followed soap operas in the business world this year, the latest round of the Orascom Telecom (OT)- France Telecom (FT) heavyweight fight goes to the Egyptians. An Egyptian court ruled Tuesday against FT's appeal to overturn a ruling rejecting its bid to buy out OT's shares in mobile telecom giant Mobinil. Market regulators had already rejected FT's bid to buy the Mobinil shares at LE 236 per share, as opposed to the LE 273 per share that the Egyptians have demanded. The court yesterday upheld that decision. The Egyptian Financial Supervisory authority has rejected the bid three times, calling the price per share too low. The court "has supported the regulator's decision to reject the bid, deputy head of Egypt's financial regulator Khaled Seyam told Bloomberg, immediately in the wake of the news which broke Tuesday afternoon. The bidding war is over OT's stake in a holding company that owns 51 percent of Mobinil. Though the initial dispute began several years ago, the firestorm began in earnest this March when an international arbitration court sided with FT. Subsequent decisions in Egyptian courts and by Egyptian market regulators have gone in favor of OT. A France Telecom spokesman said the firm would make a further appeal against the committee's decision, and if this failed, it would seek international arbitration, Reuters reported. FT said it would not launch any further offers above LE 237 ($42.78) per share. A France Telecom spokesman said the firm would make a further appeal against the committee s decision, and if this failed would seek international arbitration, Reuters reported. FT said it would not launch any further offers above LE 237 ($42.78) per share. The decision confirms that there is a real problem in Egypt concerning the respect for international law and also for stock exchange norms applied at the main financial centers, the spokesman told Reuters. Seyam said the committee ruled that the original rejection was based on valid legal arguments, Reuters reported. That ruling rejected the offer as it violated the principle of giving equal opportunity to all shareholders. Even though some analysts expected that the Egyptian telecom giant may eventually sell its shares to FT, it may be more inclined to continue the fight in the wake of Mobinil's announcement last week that second quarter earnings were up significantly. Mobinil recorded a 26 percent jump in earnings, bringing its three month haul to LE 536 million. "Mobinil's half-year 2009 financial results came in line with Beltone's estimates, in terms of the top-line and EBITDA performance, as our forecast for revenues were LE 4.905 million, 6 percent lower than the actual reported results, wrote brokerage firm Beltone Financial in a statement. And FT could use the boost of holding a greater share in the well-performing Mobinil. The French company announced last week that its revenues for the first half of 2009 had fallen by 0.5 percent. When OT chairman Naguib Sawiris launched efforts to block FT's bid earlier this year, investors responded positively, seeing either outcome of the legal dispute as a victory for the firm. Shares of OT, which traded at a low of around LE 17 per share in March, have rebounded and today trade around LE 37. Investors saw a rejection of FT's bid as a plus for OT because it would mean that the company could continue to haul in revenue from Mobinil, which has proved to be one of the most substantial and reliable sources of income for OT, whose operations sprawl across several continents. If OT was forced to part with Mobinil, most investors reason, OT could use the tremendous cash haul from the sale to expand into new markets or to bolster its operations in existing ones. But the more the current arbitration dispute drags out, the more it could begin to negatively affect all parties' bottom lines. Sawiris said last month that the conflict had already begun to affect Mobinil. At the mercy of Egyptian courts, FT faces a difficult decision going forward as to whether it will continue in its efforts to buy Mobinil.
